FAO Food Price Index Drops To Four-Year Low - Ghana

FAO’s monthly food price index registered another drop in August, continuing a five-month downward run and reaching its lowest level since September 2010.

The index’s August average of 196.6 points represents a decrease of 7.3 points (3.6 percent) from July. With the exception of meat, prices for all of the commodities measured by the index dipped markedly.

Dairy led the pack, with FAO’s sub-index for dairy products averaging 200.8 points in August, down 25.3 points (11.2 percent) versus July and 46.8 points (18.9 percent) compared to a year ago — the result of abundant supplies for export coupled with reduced import demand.

Russia’s prohibition at the beginning of the month on imports of dairy products from several countries helped depress prices, while slackening imports of whole milk powder by China (the world’s largest importer) also contributed to market uncertainty.

With 2014 being another record year for wheat production, prices for the staple grain continued to slide in August, reaching their lowest value since July 2010. Similarly, near-ideal growing conditions in key producing areas, coupled with abundant stocks, have seen maize prices retreat to a 4-year low.

However, rice bucked the trend in grains, with its prices rising in August, reflecting increased import demand, lower-than-expected releases from stockpiles by Thailand, and unfavorable weather affecting some crops in Asia.

“Rice supplies appear to be ample world-wide, but stocks are very much concentrated in a small number of countries, and often owned by governments.

“This means that these countries can very much influence world prices, by deciding whether to let those supplies flow to the market or not,” said FAO economist Concepción Calpe.

“The fact that Thailand is still limiting sales of the huge rice volume held in public warehouses has been one of the principal factors underpinning world prices in recent months.”

FAO’s Food Price Index is a trade-weighted index that measures prices of five major food commodities on international markets: in addition to sub-indices for prices of cereals, it also tracks meat, dairy products, vegetable oils, and sugar.

The vegetable oils sub-index clocked in at 166.6 points in August, 14.5 points (8 percent) less than the previous month and the lowest level since November 2009.

FAO’s index of sugar prices averaged 244.3 points in last month, down by 14.8 points (5.7 percent) from July, but still 2.2 points (1 percent) higher than one year ago.

Moreover, its meat sub-index averaged 207.3 points in August, 2.5 points (1.2 percent) more than in July but 25 points (14 percent) above last year.From TheChronicle.com.gh

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